Corporate Social Responsibility (CSR) / Corporate Governance and Compliance

Corporate Governance

In an environment characterized by rapid economic and social change, it is our firm belief that a company’s ability to conduct its business activities in a fair manner and earn the trust of its stakeholders is crucial to ensuring continued growth and enhancing corporate value. We recognize that a company must constantly improve its corporate governance system—including its internal control structure—to secure its stakeholders’ trust, as well as to fulfill its duties as a corporate citizen. Accordingly, we continue working to create a management system that facilitates swift and accurate management decision making, thereby ensuring the effectiveness of our business execution and the fair and appropriate monitoring thereof. We will also strive to guarantee management transparency by promoting timely disclosure.

Taiyo Nippon Sanso's Corporate Governance Structure

Corporate Governance System

Management Structure

The Board of Directors is composed of 15 directors and four standing auditors, two of whom must be nonexecutive directors (one of these must be an outside director). To facilitate effective, efficient decision making by the Board of Directors, we established the Management Committee to serve as an independent forum for deliberation, thereby clarifying Board rulings and accelerating the decision-making process.

Auditing Structure

Currently, our Board of Auditors consists of four auditors, two of whom are outside auditors. Auditors sit in on meetings of the Board of Directors and the Management Committee and oversee compliance and management efficiency by communicating with representatives and through operational audits of subsidiaries.

There is also a Corporate Audit Office operating directly under the auspices of the president, whose job is to oversee legitimate operations and efficiency. Through close communications with auditors, as well as with our external auditing firm, this office supports efficient auditing.

Basic Policy Behind Our Internal Control Structure

As prescribed by Japan’s Corporate Law, we established a Basic Policy for Constructing an Internal Control System, i.e., basic guidelines for the creation of an internal control system. In line with this policy, we are working to reinforce internal controls by clarifying decision-making authority and business practices, among others. We have also established an Internal Control Committee, which is chaired by the president and meets at the end of each fiscal year to examine business practices and business activities. Under the Internal Control Committee, we have created the Compliance, Risk Assessment and Technological Risk Management taskforces, with the aim of reinforcing compliance and facilitating the comprehensive management of monitoring and responses to corporate risks.

Compliance System

We recognize that a company must act faithfully according to the values and ethics demanded of it as a corporate citizen, operate fairly and appropriately, and act in harmony with the wider society as it pursues its corporate mission. Based on this recognition, we have taken steps to create a robust compliance system—including formulating a code of conduct and establishing internal monitoring and auditing frameworks and a helpline—and ensure we are acknowledged as a trusted corporate citizen.

We have also established a Compliance Taskforce, a subcommittee of the Internal Control Committee that is chaired by the General Manager of the Corporate Administration Division, who is also a senior managing director. The purpose of this taskforce is to manage and oversee compliance for all divisions and Group companies. In addition, the taskforce provides compliance training to new recruits, as well as to employees who have been promoted to managerial positions, to foster awareness of the importance of adherence to relevant laws and regulations.

Risk Assessment System

Companies must effectively manage a wide variety of risks with the potential to affect their operating activities. The risks we manage include, but are not limited to, increases in the price of crude oil, foreign exchange and interest rate fluctuations, changing demand trends, technological innovation, moves by customers to shift production offshore, product defects, natural disasters such as earthquakes and typhoons, environmental pollution and occupational accidents. The Risk Assessment Taskforce, a subcommittee of the Internal Control Committee, was established to spearhead risk management for the entire Taiyo Nippon Sanso Group.

Effective risk management depends on our ability to accurately anticipate risks with the potential to affect our operations, as well as to estimate potential impact. To this end, we have established a dedicated team in each of our divisions, which is tasked with identifying and assessing risks specific to divisional operations, including those of Group companies, as well as with supervising the implementation of countermeasures and quantifying remaining risks and/or the likelihood of subsequent recurrence. The results of this process are compiled by each division into an assessment sheet, which is then submitted to the Risk Assessment Taskforce.

Technological Risk Management System

The Technological Risk Management Taskforce prioritizes the management of risks related to security, product quality and safety, the environment and intellectual property. This taskforce encompasses the Environmental Committee, the Product Quality and Safety Committee and the Intellectual Property Committee, which are responsible for assessing and responding to challenges specific to their area of focus. This configuration facilitates the effective management of such risks by ensuring consistent awareness across the entire Taiyo Nippon Sanso Group.